By Lucia Maffei
Charles Schwab Corp. reported fourth quarter 2015 results that topped expectations — but only with the help of one-time gains.
In the latest quarter, the San Francisco-based provider of brokerage, banking and asset management services posted net income available to common stockholders of $378 million, or 28 cents a diluted share, up 15 percent from $329 million, or 25 cents per share in the year-ago quarter.
Fourth-quarter revenues surged 9.0 percent to $1.69 billion from $1.55 billion a year ago.
Analysts surveyed by MarketWatch had been expecting Schwab to report per-share earnings of 25 cents, and the 28 cents a share the company turned in technically beat forecasts. Without the help of a total of 4 cents a share provided by non-recurring items, however, the earnings per common share would have ended up one penny below expectations.
Diluted Earnings Per Share (in dollars)
“Non-recurring items’ impact is pretty small,” confirmed Michael Wong, senior equity analyst at Morningstar, who added that overall Schwab is doing “pretty well.” He also pointed out: “Non-recurring items have very little value for most analysts, because they don’t signal what is going to happen in the future.”
Richard Repetto, a principal of Sandler O’Neill and Partners, agreed that the company is performing “in line with expectations.”
Mr. Wong said that Schwab’s full-service approach is bearing fruit, noting that “Revenue coming from fee-based accounts is more stable quarter to quarter and less subjective to competitive trading.”
For all of 2015, Schwab posted net income available to common stockholders of $1.36 billion, or $1.03 per diluted share, up 8.2 percent from $1.26 billion, or 95 cents per share in the 2014 comparable period. Revenues increased 5.3 percent to $6.38 billion from $6.06 billion the year before.
“The future for Charles Schwab is looking pretty bright, because the positive effects of rising interest rates are overcoming the negative effects of the recent trouble in the stock market,” Mr. Wong concluded.
On Tuesday, Schwab shares closed at $26.55, down 3 cents, or less than one percent.